REGIONAL INTEGRATION

REGIONAL INTEGRATION

This chapter covers aspects related to broadband access and regional integration. It addresses how broadband policy makers and regulators can benefit from a closer regional coordination, by increasing the sharing of experiences, setting of common principles or through harmonisation, when economics of scale substantiates it. This chapter also touches good practices to foster infrastructure deployment and competition of international connectivity among countries in the region and with other regions of the world. Finally, it deals with how broadband access policy making can help to encourage further regional integration, by responding to challenges and opportunities brought by development on international mobile roaming and the Internet of Things (IoT).

1. Regional integration can be defined as the process of increasing social and economic relations among countries located in a certain geographical area. This relates to broadband policies in two different ways. First, in general, policies aimed at fostering broadband use and access can serve as enablers of regional integration, by lowering barriers for the exchange of information among businesses and people in different countries. In particular, policies for the development of international broadband connectivity, such as through cross-border backbones and international submarine cables, and through services such as international mobile roaming, are critical tools for increasing regional integration. Second, reinforcing collaboration among policy makers and regulators in the region via participation in policy and regulatory networks, can also be very useful to improve existing regulatory frameworks, improve trans-border services and to foster investment.

2. This Chapter addresses the following issues related to regional integration in the context of broadband policies: regional co-ordination among policy and regulatory authorities in the region, international connectivity infrastructures (both, regional and international), international mobile roaming and the Internet of Things (IoT).

3. Broadband serves not only as a general purpose network that contributes to increasing regional integration, but also as a public policy realm in itself, where regional negotiations and diffusion of models and good practices take place. This Chapter highlights this regional policy realm and the need of improved regional co-ordination mechanisms to harmonise ICT and broadband regulatory frameworks (including technological standards) and in public policy.

4. When using broadband services, data typically flows across national borders in a seamless manner for business and consumers. Many applications and content are located in data centres in foreign countries. This means that insufficient or inefficient international connectivity can act as a bottleneck for broadband services both in terms of quality of service (congestion and reduced speed) and higher costs for the final delivery of services. For this reason, the issue of availability and competition for international connectivity infrastructure and services regional terrestrial backbones, international submarine cables, and international gateways), is addressed as a key area for policy and regulatory attention.

5. Internet exchange points (IXPs) are a fundamental building block towards the growth of local content (OECD, 2012) and the development of a competitive ecosystem of more affordable broadband services (ISOC, 2012). IXPs serve as interconnection hubs for Internet service and content providers and network operators at large. IXP participants benefit from exchanging traffic directly instead of using transit providers to exchange traffic in foreign countries, which in turn increases speed and lowers the cost of the transaction. The use of IXPs can dramatically reduce the cost of Internet service supply, enabling lower prices for final consumers and improving the reliability and robustness of the Internet connectivity within a given country or region. A further key area for regional co-operation is in the allocation and management of IP addresses, which in this case is undertaken by LACNIC. Implementation of IPv6 is an additional issue for attention, not just for regional integration, but also for ensuring international connectivity under extended IP addressing schemes, better enabling all stakeholders to meet issues arising from exhaustion of IPv4 addresses.

6. In an increasingly digital and globalized economy, convenient and affordable access to telecommunication services when visiting other countries is key to facilitating commercial and social exchanges. Lower prices for international roaming contributes to reinforcing economic integration among countries in the region, as well as with other countries in the world. Therefore, regulatory measures aimed at encouraging and facilitating the use of international roaming services, and especially mobile broadband access are also addressed.

7. Finally, encouraging the deployment and use of the Internet of Things (IoT), addressed in this Chapter, allows for extending the benefits of broadband to the physical world via machine-to-machine interactions that are increasingly used in diverse fields, such as in healthcare, transportation or agriculture. Although policies to encourage IoT development are mainly national, regional and international collaboration is especially important, as many policy aspects are related to areas such as spectrum availability, numbering, double taxation when roaming and standardization where the economics of scale involving millions of devices are critical to spur innovation, investment and development.

Policy objectives in the LAC Region

Policy objectives in the LAC Region

8. Policy makers and regulatory authorities should foster a culture for sharing good practices and approaches and, when possible, their experience with demonstrable outcomes. Co-ordination among LAC countries leads ultimately to better policies and encourages economics of scale, investment and competition in the region.

9. Overall, broadband policies in the context of regional integration should be aimed to lower barriers and increase competition for the use of cross-border broadband services, optimize cross-border data flows, as well as to facilitate the development of a regional market encouraging investment in the region via the application of common public policies in those areas where economics of scale are present and/or cross-border trade would benefit from aligned public policies.

10. On international connectivity, policy objectives should focus on encouraging (and funding when needed) deployment of regional terrestrial backbones, submarine cables and international gateways. Effective regional co-operation is essential to co-ordinate efforts to implement international connectivity infrastructures. Countries should also aim at developing a competitive marketplace for Internet traffic exchange to meet domestic demand for Internet bandwidth and self-sufficiency in a cost-efficient way. In order to do so, they should foster the implementation of IXPs. Most importantly, sufficient competition should be ensured and dominance issues addressed to enable all actors to benefit from international connectivity (Chapter 3 on Competition and Infrastructure Bottleneck addresses issues related to dominance and regulatory measures to be taken).

11. Regional integration implies that a flow of people, goods and data should be efficiently facilitated across borders. In an increasingly data-dependent world, users travelling outside their country of residence, or connected machines operating across borders to facilitate trade and travel, should not be burdened with uncompetitive international roaming prices. Therefore, policy objectives related to international roaming should be focused on the issues which are developed further here in the good practices section: promoting transparency for customers, as well as awareness of substitutes for international roaming, protecting them from inadvertent high bills (billshock) and inadvertent roaming, facilitating the development of trans-national roaming offers, ensuring a competitive wholesale market, and promoting competition at the retail level.

12. Finally, any regional integration policy should take a long-term perspective and be prepared for future demands and new emerging cross-border services. Online services, as such, tend to challenge national boundaries and taking into account the increasing number of connected devices, including vehicles, policy makers should be aware of future challenges and opportunities for regional agreements as well as for their national frameworks. Preparing for the future requires, for example, conducting assessments in policy frameworks to make sure that the adoption and deployment of IoT applications and services is enabled and ensuring that adequate resources are available (such as spectrum and number identifiers) and solutions which foster mobility and avoid lock-in are in place. The objective is to make sure that the encouragement of IoT development is addressed in both national and regional public policies as a relevant policy objective.

Tools and measurement for assessment in meeting policy objectives in the LAC Region

Tools and measurement for assessment in meeting policy objectives in the LAC Region

13. As with any other policy area, collecting data and empirical evidence is key to ensure that measures are aimed at addressing the key issues in an adequate manner, as well as to assess success or failure to take any corrective action.

14. In recent years, studies have been carried out to assess the level of LAC regional integration. There are indexes, for example, that aggregate indicators measuring the characteristics of the several stages of regional integration (Free Trade Areas, Customs Union, Common Market, Economic Union and Total Economic Integration). Work in other regions has looked at indicators to assess variations in the degree of regional free movement of people, trade, co-operation on statistical measurement, governance, industry, investment, energy and infrastructure (such as in the case of the Africa Regional Integration Index ) or have focused on trade, foreign direct investment, labour mobility and finance indicators to monitor progress on regional cooperation and integration, such as those used to assess integration of firms in global value chains (OECD and World Bank, 2015) or the Asia Regional Integration Indicators Database).

15. Despite these efforts, quantifying co-operation with other countries and international organisations is not a simple task. The indexes mentioned above offer a general framework for considering different proxies for tracking regional integration (defined as the outcome of policy decisions) in a broad manner. More specifically in the context of ICT/ broadband policy co-operation and co-ordination, assessments to elucidate progress in regional co-operation could include:

• Qualitative and quantitative assessment of the participation in international/regional forums and organisations, as well as the main issues discussed and policy decisions taken.

• Periodical assessment on resources applied (in terms of budget and human resources involved) and benefits obtained (even if they cannot be quantified) in order to guide international activity, as well as to set priorities in the allocation of resources for different lines of work.

16. For international connectivity infrastructures and services, measurement could include:

• Maintaining an inventory of existing infrastructures providing connectivity to other countries (such as submarine cables, international trunks and international gateways) and publishing aggregated data that protects confidentiality of sensitive information from operators.

• Monitoring traffic and prices through regular information requests to operators, complementing it with normalised benchmarking with other similar and/or leading countries. Additionally, maintaining regular contacts with operators is also useful to identify existing bottlenecks or potential needs in the future.

17. Measurement of IXPs should include the following tools:

• Data collection and benchmarking on domestic Internet bandwidth at IXPs over time relative to other countries within the region and internationally. Specific measurements that are especially useful to support policy guidance are: total available capacity at the IXP, total number of connected autonomous system numbers (ASNs) and the number of content delivery networks (CDNs) hosted at the IXP.

• Monitoring of membership fees and conditions to participate in IXPs to ensure a competitive and neutral interconnection platform.

• Establishment of measurement points at service providers to analyse the performance of the IXPs.

18. On IPv6, establishing metrics to trace the progress of its adoption in the Internet is not a simple task. Over the years, there have been many approaches and associated measurements reflecting the fact that the Internet is not a single integrated system but a collation of component subsystems, so that IPv6 measurements can be performed within the context of any particular subsystem. The list below compiles several possible measurements, at different sub-systems and therefore with a snapshot of the overall transition (OECD, 2010):

• Measurements using the routing system: the Internet routing table can be used to track the number of advertised routes that constitute the IPv4 Internet, and compare this with a comparable count of the number of routes in the IPv6 protocol. A complementary measure is to compare the number of unique autonomous system numbers contained in the routing table that indicate the number of entities that have IPv6 networks interconnected to the Internet. LACNIC has a portal to assist with IPv6 deployment which includes statistics for the region.

• Measurements using the domain name system: the domain name system can provide a useful measurement as only domain names that can be resolved to an IPv6 address will be able to be accessed. An approach is to use the most common source of popular domain names, the Alexa list, and query this set of domains over time to establish what proportion of the names have an IPv6 address. This is public information available for policy makers.

• Measurements using Internet traffic statistics: another option is to look directly at traffic volumes in IPv4 and IPv6. Although most such data is generally considered to be proprietary and is not publicly released, an increasing number of Internet exchange points publish data about their volumes of IPv6 traffic so that estimations of the adoption over time can be undertaken. Regulators could request this type of information from IXPs.

• Measurements of end client capabilities: for a client end system to be able to make a connection using IPv6, then all the Internet’s subsystems must also be functional in supporting IPv6. One simple way of measuring the number of IPv6-capable clients is to use a dual-stack service point and offer both IPv4 and IPv6 capability. Counting the number of systems that prefer IPv6 to IPv4 provides a good indication when the sample is large enough. Another measurement technique includes carrying out IPv6 connectivity tests with a sample of clients to determine their preferences. Both measurements are regularly carried out by some content providers and regional internet registries and can be accessed by policy makers.

19. Policy making and regulatory action in the area of international roaming should also be based on evidence, such as through monitoring the evolution of prices, volumes and revenues for each roaming service, and – when available – data on real costs for international roaming services. In order to collect these data from operators, communications regulatory authorities must have the corresponding powers set in the regulatory framework. Benchmarking with other countries is also very valuable to identify trends and specific characteristics of national markets compared to similar countries. Publication of costs and price comparisons should not lead to disclosure of confidential commercial information, for which aggregation of data can be considered. The Body of European Regulators for Electronic Communications (BEREC) is one useful reference on the type of measurements and indicators that can be used to monitor prices and volumes for international roaming services (Box 1).

20. Finally, monitoring the development of IoT can be done by:

• Using proxy measures such as the number of SIM cards dedicated to IoT services (i.e. Machine-2-Machine or M2M). Despite limitations to this approach, it can provide an idea on the use of IoT and make subscriptions aimed at traditional mobile services more relevant for the uses to which they are put (something that is not possible if all subscriptions for people and M2M are bundled).

• Keeping track of market developments and spectrum use in licensed and unlicensed frequency bands to ensure availability of sufficient spectrum to meet the increasing demand for M2M/IoT services.

Overview of the situation in the LAC Region

Regional co-ordination among policy makers and regulatory authorities

Regional co-ordination among policy makers and regulatory authorities

21. The American and Caribbean region is home to one of the oldest regional intergovernmental organisations in the world, the OAS, established in 1890. The fact that Latin America and the Caribbean is a region with natural inclinations for deeper regional integration, due to linguistic, cultural and political commonalities, has led historically to a significant number of attempts to increase the economic, trade and political co-operation in the region. However, the complexity and heterogeneity of the LAC region, which cannot be understated, has also spurred different sub-regional co-operation and integration initiatives, which have, as with any range of bodies, achieved different levels in meeting expectations. In the broadband policy area, the multiplicity of memberships, the number of different regional bodies, and the sometimes limited integration outcomes is a case in point.

22. In addition to international organisations with members around the world, including those with regional programmes or presence, several regional co-ordination bodies exist in the LAC region with some mandate over issues related to the supply and demand for broadband. A summary of these regional bodies and resources, with more information on their work can be found here (Table 1). An additional table with the membership of these institutions is available (Annex 1 of this Chapter). Some of these bodies have a broader mandate and strive to establish a more integrated Latin American market in general (e.g. MERCOSUR, Pacific Alliance). Others specifically focus on the ICT sector and a coordinated approach towards ICT policies (e.g. CITEL, REGULATEL).

23. Several factors drive regional integration in the LAC countries. Some of them include the geographic proximity, the engagement of political and national leaders that help on the dissemination of regulatory models and good practices, and the existence of the regional organisations that enable the implementation of initiatives to co-ordinate and collaborate on ICT and broadband issues, such as, more recently ECLAC with its Digital Agenda for LAC (Box 2). Moreover, the existence of global telecommunication operators, present throughout the LAC region, encourages the adoption and use of good practices. Likewise, the benefit of harnessing economies of scale in the region is one that is attracting increasing attention, especially in Caribbean countries (Katz, 2014).

24. Despite efforts aimed at increasing regional co-ordination on broadband policy and for more effective spaces for doing so in the LAC region, many of the policy objectives remain unrealised. This is partially because of divergent national interests, different political and economic approaches and other dynamics that may favour different regulatory models. This tendency has often resulted in regional initiatives that lack sustained support to obtain concrete and long-term outcomes for broadband policy integration in the LAC region.

International connectivity

International connectivity

25. Despite significant improvements in the last few years, persistent gaps in LAC region’s infrastructure deployment remain, posing a major challenge to both inclusive growth and public service provision. In terms of communications infrastructure the situation is no different. For historic reasons, much of the data traffic between LAC and the rest of the world, or even among LAC countries themselves, went through the United States (IDB, 2011), notably Florida and the West Coast (Jordan et al, 2013). Around 85-90% of communications with Europe, for example, still rely on undersea cables going to the United States, since the existing cable between Latin America and Europe is outdated and is only used for voice transmission. A public-private partnership initiative to deploy a new submarine fibre-optic cable between Europe and South America, linking Lisbon (Portugal) with Fortaleza (Brazil) is under discussion.

26. More recently the region has been witnessing improvement through efforts to deploy regional submarine cables, terrestrial connections and IXPs. However, the lack of competition, redundancy, high capacity connections and shorter communication paths to and, most importantly, among LAC countries still constitutes a major infrastructure bottleneck for the development of the Latin American and Caribbean digital economy and regional integration.

27. There are multiple potential landing points for submarine cables in the LAC region with only one country out of 26 with ocean access that does not have a submarine cable. Moreover, regulatory barriers do not seem to be an impediment for more international cable deployment rather the lack of submarine cables may be that the deficit of infrastructure is due to the lack of a business case propelling the private sector to invest, which could justify state or region-led initiates, including public-private partnerships to improve infrastructure deployment in the LAC region. That being said, the experience of other regions is that increased broadband penetration and demand for services associated with greater competition is a strong driver for the private sector to increase international cable capacity to support this growth.

28. Initiatives aiming at expanding the connectivity capacity and pathways of LAC countries with other regions of the world, such as the submarine cables connecting South America with the Pacific region (South America Pacific Link – SAPL) Brazil and Europe (EULALINK) and Brazil and Africa (Sputh Atlantic Express – SAEx, South Atlantic Cable System – SACS – and Cameroon-Brazil Cable System – CBSCS) , as well as the projects of a terrestrial fibre connecting South America and Central America, will contribute to address this strategic infrastructure challenge in the LAC region.

29. The Caribbean region, more specifically, has suffered several major natural disasters during recent years, which have hampered domestic investment in telecommunication infrastructure. The Caribbean region, however, has the natural advantage of laying on the path between the two much larger markets of South America and the east coast of the United States, resulting in a number of submarine cables landing in the region.

30. Currently some of these initiatives have been slow to progress. Terrestrial connections, for example, have been facing considerably more obstacles due to co-ordination problems among countries, and operators. The following section on good practices provides more details of some of these infrastructure initiatives. The regional situation overview of other key components of international connectivity such as IXPs and CDNs follows.

31. Internet Exchange Points (IXPs) are key element of Internet infrastructure. According to Packet Clearing House , there are 480 Internet exchange points operating worldwide but 84 countries do not yet have an IXP. The number and distribution of IXPs are largely the result of the availability of demand and supply, market conditions and the policy and regulatory environment in each country.

32. Broadly speaking, the LAC region is characterised by a small number of large ISPs, many of which are dominant operators acting also as multinational regional carriers. There is a relatively low rate of entry of new ISPs within the region, and this lack of new market entrants hampers the growth rate and competition in the industry overall compared to other regions.

33. Even at a time when IP transit service prices continue to decline throughout the world, significant price and performance disparities persist between primary Internet traffic hubs (such as London, Los Angeles and Miami) and those in the LAC region. Prices have fallen much slower and transit is more expensive in regions that remain largely dependent on long-haul links to Europe or the United States to gain access to international connectivity. In the LAC region, many service providers still incur the high costs of transport to and from Miami for national traffic, which obliges them to set much higher prices than when using local IXPs for domestic traffic exchange. There are, however, positive signs for change.

34. In recent years, there has been a positive evolution in the South American ecosystem. Firstly, a massive infrastructure building effort led by Brazil and Argentina has resulted in a total of 42 IXPs in these two countries. Secondly, the arrival of the CDNs at the exchange points has promoted a more active peering community, increasing the number of local and regional traffic exchange opportunities. As a result, the fibre that was used before to exchange domestic traffic between neighbouring countries in Miami is now actually used in a more efficient way to route international traffic towards North America and Europe.

35. The relatively few attempts at localising traffic exchange in Central America have met with mixed success thus far. Panama, Nicaragua, and El Salvador have deployed IXPs that are either no longer active or are not growing. Belize and Guatemala have not yet attempted to form exchanges. By contrast, the ICT Ministry of Costa Rica (MICIIT) together with multiple stakeholders as well as the regulator in Honduras initiated IXP projects in 2014 that have led to exchanges neutrally managed by non-profit associations. Despite ongoing refusal from incumbents to participate at the exchange, by way of example, the CRIX has now twenty one participants.

36. In the Caribbean, several countries formed IXPs which have attracted sufficient interest to grow significantly such as the case of St Maarten (2008), Curacao (2009) and Grenada (2011). In 2014, IXPs in Trinidad and Tobago and Jamaica were built with the engagement of regional actors such as the Caribbean Telecommunication Union (CTU), PCH and LACNIC. Other IXPs attempts in the region have had limited success due to divergent interests by the incumbent and the major mobile players operating in the region.

37. In the LAC region, a total of 11 countries lack their own IXP and still rely on expensive and slow international connections to exchange traffic originated and destined in the same country. The number of active IXPs in each country is illustrated here (Figure 2).

38. Besides IXPs, Content Distribution Networks (CDNs) are increasingly relevant for international connectivity. By 2019, Cisco predicts that CDNs will carry nearly two-thirds of global Internet traffic, up from 39% in 2014 (Cisco, 2015). Akamai, the leader in the content delivery sector, estimates that between 15% and 30% of the world’s web traffic is delivered today through their platform. In recent years, an increasing number of content providers and content delivery networks (CDNs) such as Google, Akamai and others have been entering the markets in the LAC region by interconnecting to ISPs at existing IXPs. In the LAC region, content delivery networks currently have infrastructure deployed at IXPs in Argentina, Brazil, Mexico, Ecuador and Peru. In Costa Rica, there are ongoing discussions with several content providers.

39. IXPs are a very efficient way to have direct interconnections with a large number of networks in the same location, thus increasing the quality of service of the traffic exchanged (direct paths and low latencies). The number of CDNs participating in IXPs can be a proxy of the presence of CDNs in the region. Results show that CDNs and content operators are present at least in Brazil, Argentina and Curacao although not in the same proportion (Table 2).

40. The results on CDN deployment at IXPs in Brazil and Argentina are in line with CGI.br and CABASE efforts to facilitate the construction and operation of neutral IXPs in each country. As for the Caribbean, AMS-IX Caribbean, in Curacao, seems to be the only location chosen by two CDN and content players to serve the sub-region.

41. Brazil stands out in the LAC region, and in the world, with its 13 CDNs connected to 27 IXPs. As such, most traffic delivered to the Brazilian market should therefore be hosted in Brazil, which contributes to stimulate consumption further given that CDNs use high speed connections to other networks via those IXPs.

International Roaming

International Roaming

42. Although there have been advances in recent years with several providers already leading initiatives to reduce retail roaming prices, international roaming prices in the LAC region remain high and unrelated to costs, as in many parts of the world. This is an area of concern for regulators in the region and several studies have been carried out in the LAC region with the support of the IDB. A few countries in the region are moving forward with implementing bilateral agreements to reduce prices for international roaming services, such as Colombia with Peru and Ecuador, as well as between Chile, Argentina and Peru. Furthermore, an agreement was reached in the context of the Pacific Alliance between regulators in Mexico, Colombia and Chile to share information and carry out studies related to roaming in the region (Regulatel, 2016). It should be noted that at the moment of preparing this toolkit, no country in the region was applying price regulations for international roaming services.

43. Some countries in the region such as Chile, Colombia, and Costa Rica have implemented regulation on blocking roaming by default, in order to reduce billshock and inadvertent roaming. Billshock issues have also been addressed in Chile, Peru and Costa Rica. In Colombia and Costa Rica a consumption cap is set by consumers, together with SMS notification by operators when 80% of the cap is reached and a daily SMS is available informing users of incurred charges. Billing per second and per kilobyte is mandated in Chile, to avoid unfair charging. Brazil, Chile and Costa Rica have also imposed the obligation for operators to send an SMS when roaming is activated informing users of prices for each specific service, as well as the implementation of limits for data consumption.

44. Aside from the forgoing examples, however, transparency and billshock regulatory measures for international roaming are not in place in most of the countries of the LAC region. In terms of market developments the first roam-like-at home (RLAH) offers, or plans that offer similar attributes with an additional charge, have started to emerge in the region, though – as in other parts of the world – they are still very much an exception. In addition, some of the countries included in these plans are outside the LAC region, which while a very welcome development is ahead of including LAC countries. To date the most notable RLAH offers have been between Mexico and the United States, though some exist between Costa Rica to Central American and North American countries. Experience shows that these plans are emerging where there is increasing competition in response to customer demand for more integrated plans that include regional roaming.

45. Double taxation on roaming (indirect taxes both in the visited country for wholesale services and the home country for retail services) remains an important issue in the LAC region, together with general issues on government charges and taxation for all broadband services addressed in Chapter 5. Double taxation applies to 72 percent of roaming routes in Latin America (IDB and REGULATEL, 2013). According to the GSMA, this results in price increase up to 40 percent.

Internet of Things (IoT)

Internet of Things (IoT)

46. The development of devices, applications and services under the term “Internet of Things” (IoT) and “Machine-to-Machine Communication” (M2M) is expected to grow significantly in the world, including in the LAC region. The total number of connected devices in use globally is projected to grow from 10 billion in 2013 to anywhere from 19 billion to 40 billion by 2019.

47. LAC countries view IoT as an emerging opportunity and policy makers are increasingly interested in promoting and monitoring its growth as well as removing barriers and looking at potential risks from fields such as privacy and security to consumer protection and taxation. In terms of reviewing potential barriers, countries such as Brazil have examined the taxation associated with SIM cards, used for M2M, while Colombia’s national regulatory agency is currently analysing from a technological and legal point of view the growth of its digital ecosystem to assess the needs of the sector in order to implement and recommend policies aimed at fostering IoT. Before that, Colombia studied mobile numbering policies but did not implement any specific measures.

48. Brazil has adopted measures recently to stimulate IoT deployment. In May 2014, a special tax regime for M2M systems without human intervention was introduced to foster adoption and use of the IoT. This has contributed to the growth of M2M connections in Brazil that increased from 161 thousand to 2.3 million in 2015 (Figure 3).

Good practices for addressing opportunities/challenges/objectives in the LAC Region

Regional co-ordination among policy makers and regulatory authorities

Regional co-ordination among policy makers and regulatory authorities

49. Regional and international co-ordination among policy makers and regulatory agencies in the LAC is key to ensure co-ordinated consistent approaches on cross-border issues, to promote agreements on issues where economics of scale are relevant to encourage investment and innovation, to negotiate common LAC positins for international for a (e.g. UN, ICANN, etc) and, to enable the sharing of experiences and good practices. Fostering a culture of sharing policy and regulatory approaches among peers not only leads to better policies, but can contribute to encourage investment in the region by facilitating the application of common views on policy aspects, leading to a more predictable and stable regulatory framework.

• Building stronger and more transparent organisations: concentrated effort should be carried out to build stronger and more transparent organisations. In the LAC region, this could be done by drawing on existing good practices of other international bodies. Countries should make sure their objectives are reflected in the constitution of the regional co-ordination body, in order to strengthen ownership and their involvement in regional institutions and, increasing the benefits of membership and contributing to a more stable and relevant forum. In this aim, it could also be envisaged to carefully assess the outcomes of the different bodies and analyse whether some existing bodies could be merged in order to bundle resources and capacities.

• Moving beyond intentions: countries should aim at clear action plans with concrete project outlines, timelines for action, and performance indicators supported by realistic mid-term programmes of work and budget.

• Identifying common problems to explore common solutions: countries should seek to build a strengthen regional co-ordination mechanisms enabling them to share their experiences and conduct peer-reviews in order to identify good practices for the region.

• Involving national experts: it is important that national experts working on policy making and/or regulatory measures are consulted and take a leading role in the analytical work of regional fora. This can be undertaken in the form of expert groups aimed at specific issues that meet regularly, either physically or virtually. Relying only on a secretariat may not be feasible for regional organisations which are subject to budgetary constraints and outsourcing all of the work to consultancies limits the benefits brought by repeated and prolonged working interaction between experts within different national authorities of a region. The direct involvement of experts in outputs of regional co-ordination organisations contributes to the creation of a strong and effective network of peers that play an important component in the sharing of common solutions and for regional integration.

51. The Body of European Regulators for Electronic Communications (BEREC) is one example of a well-functioning regulatory body, serving as a key forum for sharing of information among regional regulatory authorities (Box 3).

International connectivity

International connectivity

52. Encouraging investment and competition on international connectivity in the LAC region requires a broad strategic programme, involving analysis of existing and estimated capacity needs, estimating timeframe and costs for infrastructure provisioning, and deployment of submarine cables and terrestrial backbones, as well as adapting regulatory frameworks to, among other objectives, reduce regulatory and administrative barriers to foster investment and competition. Regarding regulatory frameworks it is important to consider the following issues:

• Terrestrial international interconnection. A competitive environment allowing alternative operators to use existing connectivity infrastructure at reasonable rates should be encouraged, addressing dominance issues when present. If necessary, policy actions could be taken to implement alternative gateways using public-private partnerships and setting open access conditions for all actors, with the monitoring of regulatory authorities.

• Submarine cables. Considerations similar to those for terrestrial interconnections apply to submarine cables. The existence of alternative connections is crucial, especially in the case of the Caribbean, where submarine cables are a key infrastructure providing international connectivity. As is the case for terrestrial backbones, dominance issues should be addressed via regulatory measures to ensure access for all actors to submarine cables, and considerations such as redundancy to cope with cable failures and public funding when needed should be considered.

• Internet interconnection (peering and transit). A market-led environment is preferable for Internet interconnection and regulation for access operators is not in general recommended in this area, but intervention could be justified if competition problems are detected and competition law is not enough to successfully address these problems (See Chapter 3 on Competition and Infrastructure Bottlenecks). Once more, monitoring the market regularly and encouraging stakeholders feedback is key to take regulatory decisions when needed

• International termination rates. When possible, market-led approaches should be preferred when dealing with international termination rates. However, international termination rates should be monitored by regulatory authorities, and regulation may be needed to avoid high termination rates not related to costs. Enabling innovative businesses to reduce communication costs is an enabler for improving trade, developing service industries and improving a region’s competitiveness. Conversely, policies aiming to raise payments received from foreign carriers by increasing international termination rates may have the undesirable effect of reducing competitiveness and trade opportunities, as well as even reducing termination revenue due to surpressed demand (OECD, 2014).

53. Infrastructure deployments aiming to connect multiple countries require important co-ordination efforts among different stakeholders. The deployment of regional fibre cables (terrestrial or submarine) can be carried out in the context of bilateral or multilateral agreements, although regional organisations can play a key role in facilitating dialogue. Deploying broadband infrastructure is key to spur further investment, competition and demand.

• Advance actions to improve feasibility studies and other scoping projects in order to attract different sources of financing.

• Ensure that these projects are contracted and conducted in a transparent and open manner, enabling a fair and competitive environment for all operators.

• Streamline the co-ordination between different national institutions responsible for governmental decisions, particularly among Ministries of Communication/Infrastructure and Ministries of Planning/Economy.

55. Several projects of this nature are currently being carried out or are in the planning phase in the LAC region. In Central America, the AMI project (Autopista Mesoamericana de Información ) seeks to connect Central-American countries from Guatemala to Panama (Box 4).

56. In South America, the design of a fibre optic ring is being carried out within the framework of a broader infrastructure integration plan for the region supported by COSIPLAN, which plans to connect 13 countries (Box 5).

57. The establishment and operation of Internet Exchange Points (IXPs) is largely market driven and led by the private sector. Internet service providers and network operators usually decide the location and the conditions upon which they interconnect and exchange traffic. Governments have not been traditionally involved in the construction of IXPs but in recent years they have taken a proactive role in creating and enabling a conducive environment for the emergence of IXPs. This trend has been particularly true in the LAC region, in which many countries have a small number of players with limited incentives to compete.

58. In some cases, particularly in countries without an IXP, governments can play an important role by stimulating a dialogue among the different market players: network operators, ICT businesses and providers, universities and government agencies (Box 6).

59. In some countries in the LAC region, despite the existence of IXPs, the number of service providers connecting to the IXPs is very limited. When this is the case, it is good regulatory practice to remove artificial barriers such as high entry fees to connect or the obligation to have an international license to become a member of the exchange. In other cases, incumbents have declined to participate in the exchange point hampering efforts to establish an IXP. It is not advisable to force different players to use domestic IXPs but rather create an environment where the benefit for those connecting become increasingly evident to all players.

60. Governments should promote a greater national and regional dialogue and interaction between Internet service providers and other stakeholders by facilitating seminars and forums with national and international experts to promote the benefits of IXPs (Box 7).

61. Without a critical mass at the IXP, there is not a business case for CDNs and content operators to deliver traffic directly to the exchange point. Actions oriented at facilitating the interconnection of new participants at the IXP, such as incentives to deploy fibre terminations or general subsidies to compensate initial operational expenditures could support the growth of the exchange in its initial phase. That being said the costs of establishing IXPs are very modest and are quickly recouped for members by lowering their costs. This is why the most successful ISPs are voluntary industry driven initiatives (Box 8) and a lack of an IXP generally points to insufficient competition.

62. Neutral Internet exchange points with good governance and following best operational practices will attract CDN players. As for any other network, content providers and CDNs select their interconnection locations using a number of criteria. Besides cost-benefit, the neutrality of the IXPs also plays a role since networks interconnected there have the certainty that the IXP is operated with good governance and transparency.

63. The introduction of IXPs creates opportunities to develop content and services hosted in local datacentres due to several factors. First, the availability of high speed and low latency connections among ISPs enable high speed and good quality transit of local content inside the country. Secondly, ISPs have a strong economic incentive to access local content, exchanging traffic through peering agreements without the need to pay for more expensive international transit.

64. The availability of local data centres also provides an incentive for IXP deployment. In this context, promoting deployment of local and neutral datacentres is key to support the development of the local content industry that, in turn, will also encourage the deployment of IXPs, allowing for the reduction of international transit to access content. In conclusion, IXP deployment and the development of local data centres are interrelated, and policies to foster IXPs and local data centres should be co-ordinated.

65. With the increased presence of Content Distribution Networks (CDNs), the structure and organisation of Internet networks has changed for some players over recent years from a hierarchical model to a flatter one. The incorporation of specialised intermediary networks delivering content is the key factor in this transformation. Large content operators increasingly use CDNs to reach their customers in a more cost efficient and effective way. Content operators and CDNs have to interconnect with other networks to exchange traffic. The physical locations, number and types of interconnections are critical elements for the CDNs because they all influence their ability to deliver their customer’s traffic in the most cost effective way.

66. CDN interconnection at IXPs is very beneficial for both the participating networks and the CDN for several reasons. First of all, IXPs aggregate individual demand so it becomes financially and technically viable for CDNs to provide direct interconnection. Second, traffic accessed locally improves the user experience with lower latencies and also reduces the average per-bit delivery cost for the networks. Third, the network effect produced at the IXP by several ISPs accessing popular content improves the efficiency of the CDN (multiple downstream with just one upstream). Regulators should also monitor CDNs to identify barriers to competition and potential dominant positions and abuses by global CDN players.

67. Successfully run IXPs can become, on some occasions, regional references for IP-related connectivity services. LINX, AMS-IX and DEC-IX are regional hubs for Europe because they concentrate a large amount of networks with regional coverage. In reality, IXPs become regional when networks find them efficient and cost effective and grow as the market develops.. In the LAC region, the PTT Metro of Sao Paulo has the largest concentration of networks (local, national and regional) and traffic exchange on the continent. Other IXPs are aiming at becoming attractive to regional players, such as NAP CABASE in Buenos Aires and the Mexican IXP.

International mobile roaming

International mobile roaming

68. International roaming services facilitate increased convenience and productivity when travelling abroad. In a context of social and economic globalisation, as well as regional and international integration, international roaming is becoming a progressively important set of services. This is especially true for broadband access when roaming in other countries, as the use of smartphones and growing requirements to online applications become ubiquitous.

69. Extensive work has been done by the OECD on good policy and regulatory practices on international roaming. The IDB in collaboration with REGULATEL has produced a large number of reports, listed in the section on documents and references that are also an excellent reference to inform good practices. Regarding the work done by the OECD, the recommendation of the Council on International Roaming Services published in 2012 , summarises key good practices to be followed by countries in this area.

70. Countries in the LAC region should take an active role in improving consumer education and protection and promoting awareness of consumers on prices, functionality and substitutes for roaming services (such as Wi-Fi, acquisition of SIM cards in the visited countries, and use of VoIP applications), with the aim of empowering consumers to select the best option for them.

71. With this objective, policy makers and regulators should encourage domestic communication providers to make information on prices and characteristics easily available. Collaboration with consumer organisations in disseminating information on alternatives and price comparisons may also be useful. Finally, regulators and policy makers can also take an active role providing this type of information to consumers on their websites as well as providing information to consumers in the media. The information provided to consumers by Ofcom, the British regulator , the Australian Competition and Consumer Commission (ACCC) on their website as well as information provided by CRC, the Colombian regulator to consumers by video are good examples. ComReg, the regulatory authority from Ireland, by way of additional example, has created a simple tool to help consumers forecast their consumption in monetary terms (Figure 4).

72. Consumption of mobile data services is in general difficult to estimate for consumers. That being said, relatively simple tables and tools can be developed to help consumers to estimate consumption of data services based on simpler parameters such as browsing webpages, music downloading, minutes of video streaming or number of e-mails accessed while travelling abroad such as one developed by AT&T (Figure 5).

73. Awareness of roaming prices can also be reinforced by requesting operators to send an SMS to a consumer when roaming is activated, informing them on prices in the visited country, as undertaken in Brazil and Chile. Experience has shown that this measure, while not necessarily reducing prices, has led to consumers being able to make more informed choices and can be implemented rapidly by network operators.

74. In many situations, and especially for data services, consumers are not conscious of the cost incurred when using international roaming services. Taking into account the relatively high prices for international roaming services, this may result inadvertently to extremely high bills for communication services when travelling abroad. Billshock prevention measures can be put in place, empowering consumers to set limits on their consumption when travelling (typically in monetary terms, as is the case in Colombia) and setting default limits applicable to all consumers (as in the European Union). These billshock prevention measures usually include notifications when a certain consumption threshold is reached (typically 80% of the limit). Billshock measures, resulting from the decision on international roaming (Box 9), have been implemented by all European countries allowing customers to better control their consumption.

75. Citizens living in border areas must be protected from inadvertent roaming and policy makers should encourage operators to offer tariffs adapted to the use of mobile services in the border area. Inadvertent roaming issues in the LAC area, as well as best practices applied in the region has been subject to an study prepared by the IDB and REGULATEL (IDB and REGULATEL, 2013) and the recommendations included in that report can be used as a good reference by regulators and operators. In general, inadvertent roaming can be prevented by co-ordinating frequencies, location of base stations, empowering consumers to block roaming and the use of border gateways. Regulators may also publish specific regulations to ensure that operators take reasonable steps to avoid inadvertent roaming in border regions. As the technical measures to be taken may vary and evolve depending on technical evolution and standardisation of roaming features, general provisions combined with regular monitoring are usually enough to ensure that inadvertent roaming is addressed by operators in an effective way (Box 9).

76. Additionally, policy makers should look into options that help reduce prices for international roaming. International roaming is a sophisticated service involving networks from at least two countries as well as signalling, transmission, billing and customer care co-ordination. Although this complexity may result in costs being somewhat higher than domestic services, prices paid by consumers not only in the LAC region, but in most of the world, usually consumers pay much higher prices than the underlying costs of providing the service. These high prices for roaming services inhibit its use discouraging social and economic exchanges among countries and regional integration.

77. A first reason for these high prices is the lack of competition at the retail level for roaming services. Roaming services are sold in a bundle with domestic services, and the relative weight of roaming services in the bundle is low, making it less likely that non-frequent travellers will take their decision on which mobile network operator they wish to subscribe to based on prices for international roaming.

78. In an increasing global world, however, people are travelling more and more, and the use of broadband mobile access by each traveller is also increasing (access to mail, social networks, maps, etc.). This implies that consumers are starting to become more sensitive to international roaming prices, and specific offers for international roaming at local prices in all regions including the LAC area are gaining momentum, as operators have identified a market opportunity in this area (Box 10). Although the number of roam like at home (RLAH) offers in the LAC region are still few, and mainly based on add-ons to be paid by consumers, it may be expected that in the future this type of offer will increase.

79. Some market actors, such as Apple or Xiaomi , are introducing virtual SIMs, that allow for a convenient use of international roaming services without changing the SIM card in the terminal device. In the future, Virtual SIMs can exert a competitive pressure for traditional operators and, as such, their development should be monitored to ensure that there are no regulatory barriers for their use to increase competition. Where such services are available they are offered in co-operation with operators in those markets. These operators are free to set wholesale or retail prices depending on whether the service is sold directly to an incoming roamer or via wholesale offers to an intermediary, such as an MVNO using agreements negotiated by their home MNOs.

80. A second reason for high prices for international roaming services is the frequently high prices for wholesale services. A high wholesale price for roaming services in a visited country sets a high minimum level for retail prices. The market for international roaming services is far from perfect, as the number of operators selling these services is limited, it is affected by bilateral issues (buyers and sellers often exchange traffic), and there is a lack of price transparency. Having said that, competition for wholesale services has improved in recent years due to the availability of steering techniques and the increasing demand for data services, reducing prices at least in markets where there is price monitoring, as in the European Union.

81. To ascertain whether retail roaming prices are justified, regulators need to be aware of the wholesale prices in visited countries. This can only occur if there is agreement among regional regulators to obtain and share information. By monitoring wholesale prices regulators can apply pressure on mobile network operators to reduce retail roaming prices. Given that there is little competitive pressure on international wholesale termination rates in many countries, a significant reduction in roaming prices may requires co-ordinated regulatory intervention at a regional level. Any price regulation measure should consider a wide body of evidence in setting the level of retail and wholesale price caps, ensuring consistency of both caps, and especially that no margin squeeze arise.

82. A relevant issue to be taken into account is the Most Favoured Nation (MFN) principle of the WTO General Agreement for Trade in Service (GATS). The MFN principle means, in essence, that countries should not discriminate among the services and services suppliers of other members, so that any country granting more favourable conditions to another country (as would be the case for an agreement to cap prices for wholesale services) should extend this more favourable treatment to third countries. The MFN principle may be waived in some cases, such as the existence of an adequate Free Trade Agreement (FTA) between two or more countries.

83. The European Union is the best example of a multilateral agreement on the regulation of international roaming, aimed not only to reduce high prices for intra-European roaming, but also and especially to reinforce the building of an European internal market. The European Parliament have imposed a common unique regulation for all its members of the European Union comprising a whole set of regulatory measures aimed to address issues such as transparency, billshock, inadvertent roaming, as well as wholesale and retail prices. In June 2017, the next regulatory round will abolishintr European roaming charges – after a transition period since June 2015 – subject to fair use policy and sustainability, with European consumers being able to benefit from local prices when roaming in any country of the European Union.

84. Another interesting reference for the LAC region is the Gulf Cooperation Council (GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, which had implemented an agreement using price caps with price reductions staggered over 2010 and 2011. The agreement, which was fully implemented by February 2012 and which covers price regulation for outgoing roaming calls, resulted in price reductions of up to 70 percent. The GCC Roaming Working Group is proposing to extend the existing regulation to cover incoming calls, SMS and mobile data roaming. More detailed information on bilateral and multilateral agreements can be found at (OECD, 2013). Australia and New Zealand agreed in February 2013 to regulate high trans-Tasman mobile roaming rates through a bilateral agreement and released a joint report which recommended that the regulators in both countries be provided with sufficient powers allowing them to co-operate and to intervene in the IMR market. These powers would allow the regulators to apply price caps on wholesale and retail roaming charges and regulated terms of access and mobile-local access services (MBIE et al, 2013).

85. Many of the LAC countries are members of regional organisations or have signed trade agreements inside the area (e.g. Mercosur or CARICOM) or including countries in other regions (such as the Trans-Pacific Partnership, TPP) that could be used as platforms to reach multilateral agreements. Both Mercosur and the TPP are addressing international roaming issues, with the Trans-Pacific Strategic Economic Partnership Agreement explicitly considering the possibility of regulating of wholesale roaming services (Box 11).

86. Finally, attention should be giving to cases where double taxation affects international roaming prices. Double taxation of international roaming services occurs when the government in a visited country taxes wholesale services provided to foreign operators, and the government in the home country taxes completely retail international roaming services provided using these already taxed wholesale services. This increases the prices for international roaming even more than taxes applied for domestic services.

87. The report (IDB and REGULATEL, 2013) analysed different regulatory options that could be applied to solve the issue of double taxation, ranging from bilateral/multilateral agreements among countries to tax exemptions and reclassification of wholesale international roaming services as exported services. In any case, discussion on coordinating measures at regional fora is advised to prevent double taxation. This would allow for encouraging regional trade and social exchanges among countries in the LAC region, as well as with countries in other regions.

Internet of Things (IoT)

Internet of Things (IoT)

88. In recent years organisations such as the ITU and OECD , as well as BEREC (2016b), have examined potential initiatives and approaches in relation to IoT services to identify barriers to their deployment and have produced work aimed at ensuring competition, interoperability and consumer benefits. A growing number of regulatory authorities are also looking at these questions. Some good practices that should be considered in this area include:

• Ensure that spectrum is readily available for IoT services. While most regulatory bodies do not consider spectrum availability to be a major barrier to the development of the IoT in the short term, more spectrum may be needed in the longer term to cope with the increasing demand of IoT traffic. In this regard, some regulators such as Ofcom in the United Kingdom are taking steps to make additional spectrum available and monitor its usage to predict any significant changes in spectrum demand in the long term (Box 12).

• Ensure adequate numbering space for the emergence of IoT services. The identifiers used for IoT applications in public networks are E.164 (e.g. MSISDN) and E.212 (IMSI) numbers, as well as IPv4 and IPv6 addresses. In the short and medium term, E.164 and E.212 numbers will continue to be used to identify IoT entities and regulators should make sure that the numbering space can accommodate future growth. In the long term, however, the use of IPv6 might become the preferred solution and regulators should encourage and support the migration of service providers to IPv6.

• Adapt numbering policies to ensure effective competition and avoid lock-in. As some IoT applications might require the operation of millions of IoT devices, a major issue affecting competition is the ability for consumers to switch between connectivity service providers. A potential solution, already adopted by the Netherlands and being introduced by Belgium, is to reform the numbering policies to allow large scale IoT users to be directly allocated E.212 identifiers (IMSI numbers) and effectively become Private Virtual Network Operators (OECD, 2015).

• Ensuring that existing policies do not hinder the development of the IoT. Existing regulations in sectors such as tax, health or transport could represent barriers to the adoption of innovative approaches such as smart-metering, remote health monitoring or self-driving vehicles. Some countries are also adapting their tax policies to provide incentives for IoT services to encourage its mass adoption (Box 13). Another way of fostering the adoption of IoT is to facilitate when possible experimentation programmes in innovative topics allowing for experimental temporal licenses and numbering, reducing regulatory burden for research and development of new services.

89. Policy considerations that prepare LAC countries for the future, be it on IoT or convergent services (addressed in Chapter 6), should aim at ensuring that existing and evolving connectivity and usage gaps continue to be mitigated. IoT has the potential to contribute to broader policy objectives such as public health, energy and water management (through smart grids), and environmental monitoring (addressed in Introduction); and to maximise the dividends of ICTs throughout the whole economy and society in the LAC region.

Summing up

Summing up

90. This chapter covered aspects related to regional integration such as regulatory and policy regional co-ordination, international connectivity, international mobile roaming and Internet of Things (IoT). Firstly, policy makers and regulators in LAC countries should seek to share their experiences and set of common principles, and harmonised rules, when feasible and justified. By doing so, countries in the region would benefit from closer regional co-ordination and increased regional integration.

91. Moreover, governments, in coordination with regulatory agencies should take an active role promoting and funding when needed (under open and competitive processes) national, regional and international backbone infrastructures. Increasing competition and lowering prices for international connectivity, such as internalising national traffic via IXPs, should be a priority to increase quality of service for broadband access.

92. Regarding international mobile roaming, consumer protection measures, as those aimed to protect consumers from billshock and inadvertent roaming should be enforced; and attentive monitoring of prices, complemented with regulatory action, if necessary, is also advisable.

93. Policy makers should encourage the development of new services, such as the Internet of Things, avoiding administrative barriers and ensuring that numbering or spectrum do not act as hindrances for future development. Furthermore, the migration of service providers to IPv6 should be encouraged and supported.

NOTES

Balassa (1961) identifies in his seminal contribution these five main stages of regional integration. Dorrucci, Firpo, Fratzscher and Mongelli (2002) use this framework to construct an institutional index of regional integration and compare the path taken and status of the European Union and Mercosur.

An Autonomous System (AS) is a group of IP networks operated by one or more network operator(s) that has a single and clearly defined external routing policy. Each public AS has a globally unique number, an AS Number, associated with it. This number is used both in the exchange of exterior routing information (between neighboring Autonomous Systems) and as an identifier of the AS itself.

A Content Delivery Networkis a globally distributed network of proxy servers deployed in multiple data centers. The goal of a CDN is to serve content to end-users with high availability and high performance.

See http://portalipv6.lacnic.net/en/ipv4-depletion-report/ In addition RIPE NCC measures the number of IPv6 enabled networks per country at http://v6asns.ripe.net/v/6?s=_ALL

Lars Eggart started a study using such approach in 2007, see current results in http://www.eggert.org/meter/ipv6.

PCH maintains a directory of Internet exchanges with traffic statistics for IPv4 and IPv6 subnets, see http://www.pch.net/ixpdir.

Google measures the number of end hosts preferring to use IPv6 on their service infrastructure, see www.google.com/ipv6/statistics.html.

APNIC Labs measures IPv6 capability per country using such technique, see http://stats.labs.apnic.net/ipv6.

The intergovernmental organisations with mandates to work on supply and demand in respect to broadband include entities such as the ITU, OECD, World Bank and UNESCO as well others in a broader sense that have remits from health to transport and use broadband in their work.

See https://ec.europa.eu/digital-agenda/en/news/eu-latin-america-submarine-cable-boosting-connection-between-our-continents

See Latin America and Caribbean international submarine cables map at http://latin-america-map-2012.telegeography.com/

El Salvador is the only country in the region with access to the ocean and no submarine cable. Bolivia and Paraguay also have no submarine cable, but are land-locked countries.

See the full interactive map of deployed and planned submarine cables at http://www.submarinecablemap.com/#/.

According to the information provided by OSIPTEL, the Peruvian regulator, Peru, has signed agreements on international roaming with the following countries: Ecuador, Brazil, Bolivia and Colombia.

Besides the SMS, the operator can inform users through a phone call and/or a similar mechanism, without cost for the consumer. In addition, for roaming data with consumption limits, the operator suspends data access when the data volume contracted by the subscriber is reached.

In October 2014, Apple introduced new feature in their new iPad: the Apple SIM. This SIM card is reprogrammable and consumers can freely choose the operator to provide roaming among those having reached and agreement with Apple. Such SIM enables customers to choose operators from country to country without purchasing a SIM card in each countries. Currently, only a limited operators participate in such a program and the Apple SIM was not available in any LAC country in the moment of preparing this report, but in the longer term, Apple SIM may be extended to other countries and more operators are likely to reach an agreement with Apple (see http://www.apple.com/ipad/apple-sim/)

Xiaomi, a Chinese smartphone manufacturer, revealed in August 2015 that they will introduce virtual SIM function valid for 36 countries including OECD Member countries such as Canada, Japan and the Unites States in their newest operating system MIUI7. (http://xiaomiadvices.com/miui-7-details-features-changelogs/)

For greater certainty, no Party shall, solely on the basis of any obligations owed to it by the first Party under a most-favoured-nation provision, or under a telecommunications-specific non-discrimination provision, in any existing international trade agreement, seek or obtain for its suppliers the access to regulated rates or conditions for wholesale international mobile roaming services that is provided under this Article.

For greater certainty, access under paragraph 4(a) to the rates or conditions regulated by the first Party shall be available to a supplier of the second Party only if such regulated rates or conditions are reasonably comparable to those reciprocally regulated under the arrangement referred to in subparagraph (a). The telecommunications regulatory body of the first Party shall, in the case of disagreement, determine whether the rates or conditions are reasonably comparable.

For the purposes of this subparagraph, rates or conditions that are reasonably comparable means rates or conditions agreed to be such by the relevant suppliers or, in the case of disagreement, determined to be such by the telecommunications regulatory body of the first Party.

For greater certainty, such additional requirements may include, for example, that the rates provided to the supplier of the second Party reflect the reasonable cost of supplying international mobile roaming services by a supplier of the first Party to a supplier of the second Party, as determined through the methodology of the first Party.

BEREC (2013), “BEREC International Roaming Compliance Report”,Regulation (EU) No 531/512 of the European Parliament and of the Council of 13 June 2012 on roaming. http://berec.europa.eu/eng/document_register/subject_matter/berec/reports/1482-berec-international-roaming-compliance-report-regulation-eu-no-531512-of-the-european-parliament-and-of-the-council-of-13-june-2012-on-roaming.

European Parliament (2012) “Regulation No 531/2012 of the European Parliament and of the Council of 13 June 2013 on roaming on public mobile communications networks within the Union”. http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32012R0531&from=EN

MBIE and Australian Department of Broadband, Communications and the Digital Economy (2013) “Trans-Tasman roaming Final Report”. http://www.med.govt.nz/sectors-industries/technology-communication/pdf-docs-library/communications/mobile-phones/trans-tasman-roaming/TTR%20Final%20Report%20-%208%20Feb%202013.pdf

OECD (2012), “Recommendation of the Council on International Mobile Roaming Services”. http://webnet.oecd.org/OECDACTS/Instruments/ShowInstrumentView.aspx?InstrumentID=271&InstrumentPID=276&Lang=en&Book=False